Delhi EV Policy 2020 Part 1 – Bumper Incentives for EV Buyers!
Updated: Apr 4
The Delhi EV policy has been under discussion for more than 1 year, with a draft released in late 2019 for comments. The policy was finalized and released in early August 2020. It aims to heavily promote EVs in Delhi mainly for their pollution reduction benefits – various studies show that a large part of Delhi’s air pollution is due to vehicle emissions. While this is a welcome move to reduce air pollution, there are other benefits of EVs which the policy seems to ignore, including fuel savings, monetary savings for vehicle owners, lower road noise, and reduced dependence on imported petrol.
Because of all these benefits of EVs, we believe the policy is very beneficial, and if implemented well, could make Delhi a leader in EV adoption in India. The policy document is long, but there are two main focus areas which will give direct benefits and opportunities to EV buyers and owners:
1) Financial Incentives, and
2) Establishment of a Network of Charging Stations.
This article will give a summary of the Financial Incentives area of the policy. The full EV Policy can be found on the Delhi Dept. of Transportation website, for those interested in a full reading:
Several financial incentives will be provided to vehicle owners and purchasers to push them to choose an EV purchase instead of a gas-guzzler. These are:
Road tax and registration fees will be waived for all EVs in Delhi, amounting to between 4% and 10% of the vehicle price. If we consider that a typical electric 2-wheeler costs Rs. 1 lakh, then this is a total of about Rs. 5,500 savings in the initial purchase cost, and Rs. 1,500 of savings in every year of usage.
b) For 4-wheelers:
The policy shall provide an incentive of Rs. 10,000 per kWh of battery capacity (up to Rs. 1,50,000). as long as the 4-wheelers are listed as eligible for the FAME India Phase 2 incentives. However, the incentive is applicable for only the first 1,000 4-wheelers to be registered in Delhi.
Here is how much you would be saving if you buy these popular EVs in India:
On top of the above huge savings, the buyer may also get savings of Rs. 3,000 to Rs. 5,000 depending on which other vehicle registration fees are waived (including registration charge, number plate charge, MCD fee, and FasTag fee). Unlike the FAME-2 incentives, which are paid to the car manufacturer and adjusted in the sales price, the incentives and waivers in the Delhi EV Policy are paid directly to the car owner.
Overall, this policy will be very beneficial for the average EV buyer! For a buyer of 4-wheelers also, if he chooses to buy a low-cost EV for Rs. 8.25 lakh (like the newly launched Mahindra eKUV 100), he could get rebates and waivers of up to Rs. 2.2 lakh – basically a discount of about 27% of the purchase price on 4-wheelers!
c) For 2-wheelers:
The policy especially focusses on 2-wheelers, as 2/3rd of all new vehicles registered in Delhi are 2-wheelers. The policy provides up to Rs. 30,000 of rebate to purchasers of new electric 2-wheelers, depending on battery size. Incentives increase with size of battery, so long-range vehicles will benefit the most. In addition, a Rs. 5,000 incentive will be provided for scrapping of each old petrol 2-wheeler. The total benefit for 2-wheelers is however capped at Rs 30,000, so one customer can get a maximum Rs. 30,000 from the government including purchase and scrapping. This could perhaps be circumvented by registering the new vehicle under a different person’s name than the old vehicle.
Buyers of electric 2-wheelers should be careful to buy the battery with the vehicle to fully avail of these incentives. If the vehicle is bought without battery, then only half of the normal incentive will be given according to the policy.
The policy also provides financing support to delivery companies which use 2-wheelers to enable them to make a switch to EVs. This could be beneficial to large delivery giants like Delhivery, Swiggy, and Zomato.
For a 2-wheeler of Rs. 1 lakh, if the buyer goes for an EV option, he could get rebates and waivers of up to Rs. 40,500 – basically a discount of 40% of the purchase price on 2-wheelers! There are many electric 2-wheelers in today’s market for much cheaper, where the buyer could even get 50% to 60% discount through this policy!
d) For Goods Carriers:
Similar incentive are also provided for goods carriers – the EV owner could get a rebate of Rs. 30,000 for purchase of a new EV goods carrier, Rs. 7,500 for scrapping of old ICE goods carrier, and also 5% interest subsidy on loans to purchase goods carriers. There is no cap on the total incentive per owner, as the beneficiaries here are expected to be goods transport companies with large vehicle fleets. However, the direct incentives are limited to the first 10,000 EV goods carriers, while interest subsidy seems to be available without limit.